Supply Chain Visibility and Transparency: How Everybody Wins

Why data visibility and transparency in your supply chain are important to your partners and your customers.

By Nigel Duckworth

July 10, 2018

Supply chain transparency is rapidly becoming a priority as many enterprises realize the advantages of having and sharing certain information with trading partners and consumers. By increasing supply chain transparency, companies can connect with consumers, build trust, achieve better visibility to all parts of the supply chain to drive improvements, and react faster and more effectively when problems occur.

In some cases, companies have little choice but to increase transparency because consumers and governments are increasingly demanding more insight into supply chains and related operations. Case in point is California's Transparency in Supply Chains Act, which requires large companies doing business in California to provide information on their supply chains to help eradicate slavery and human trafficking.

Similarly, the Drug Quality and Security Act (DQSA) of 2013 "outlines steps to build an electronic, interoperable system to identify and trace certain prescription drugs as they are distributed in the United States." The DQSA also requires trading partners to notify the FDA and other trading partners of illegitimate product within 24 hours of discovery.

What Is Supply Chain Transparency?

The terms "visibility" and "transparency" are frequently used interchangeably. In general, however, the term visibility focuses more on B2B data sharing within the supply chain to make it more efficient. Better visibility and more timely data sharing enabled by B2B connectivity and data flows allow companies to collaborate more effectively around processing transactions and resolving problems. Visibility also helps them manage orders, shipments, and inventory -- as well as plan and manage transportation.

Transparency often refers to the disclosure of information to trading partners, shareholders, customers, consumers, and regulatory bodies. This benefits all parties in the supply chain, but targets consumers and end users of an enterprise's product.

A useful way to look at the differences is to consider supply chain visibility as factual as opposed to normative. It's the data that you have concerning the functioning of the supply chain from supply through to demand at each node and the movements between them.

Transparency is normative; it's data plus a commitment to openness and data sharing with parties within the supply chain and outside of it, such as with customers, prospects, stockholders and regulatory agencies.

In short, the two are intertwined; you can't commit to sharing data that you don't have visibility into. We might say that visibility is about supply chain insight and running the supply chain more efficiently, while transparency involves supply chain oversight, having accountability, and ensuring that quality, safety, and ethical standards are met.

Benefits of Supply Chain Transparency

There are many advantages to transparency. One of the most appealing is the ability to provide companies with the confidence that their suppliers, materials, and products are genuine, acquired honestly, and live up to their company standards. Transparency also demonstrates that these suppliers comply with regulations and that all components can be traced throughout acquisition and production.

Increasingly, consumers want to know that they are spending their money on authentic, high-quality, safe products that live up to their ideals. Consumers are taking the claims of companies seriously and expressing their objections on social media or switching brands when companies fail to deliver as promised.

For example, the E. coli outbreak at Chipotle restaurants in 2015 was exacerbated by the fact that Chipotle had little visibility into its complex supply chain and thus could not identify the source of the contamination, nor was there sufficient accountability to prevent it spreading. Sales fell, and their share price dropped 42 percent to a three-year low and remained there for nearly two years after the crisis.

Companies are concerned with quality, authenticity, safety, and compliance because their profits, brand equity, and reputations are at stake.

A supply chain powered by timely and accurate data improves supply chain operations and minimizes the chances of disruption and quality issues. Transparency enhances trust in the product and the company and solidifies customer loyalty. Organizations are adopting supply chain transparency practices to capitalize on a host of benefits.

Lowered risk. Visibility into the supply chain helps companies identify problems and risks early so they can address them before they erupt into major and expensive crises. Having clear standards and accountability helps ensure that someone is responsible and motivated to monitor and enforce such standards. Threats can come in many forms, including weather, labor disputes, contaminated products, and counterfeits, all of which can lead to lost sales, damaged reputations, and fines. Increased visibility into and scrutiny of the supply chain reduces these risks and makes handling problems more manageable.

Improved efficiency. Better data ensures all trading partners are aware of conditions throughout the supply chain. It also allows all parties to make decisions based on real-time data and current conditions as well as anticipate and respond to delays and disruptions quickly.

Increased trust. Data sharing and standards concerning quality, safety, and ethical conduct inspire trust in companies doing business together and lead to higher consumer trust when companies willingly share and explain relevant materials, sources, and procedures that go into making and delivering their products.

Improved cooperation. With good data, roles, and accountability, all trading partners can respond more effectively and work together when disruptions occur. The risk of substandard or contaminated products is much lower, but if it happens and a recall is necessary, trading partners can collaborate to quickly and effectively identify and remove substandard products from the supply chain and manage the recalled products.

Tips for Achieving Supply Chain Transparency

Large companies use many IT systems to manage internal and external operations, making it difficult for companies to share data and achieve transparency. However, recent technological developments are bringing supply chain transparency within reach of the most complicated supply chains.

Many organizations see cloud-based multiparty networks as a key enabler of complete supply network visibility and transparency. They eliminate the need for complex and costly point-to-point integration, which leads to siloed data, data latencies, and blind spots in the supply chain. Companies connect once to the network and are joined to all others on the network, laying the groundwork for real-time data sharing that is critical to gaining full end-to-end visibility and a vital tool for enhancing oversight and accountability.

An advanced multiparty network embraces existing systems, ensuring all critical information can be tracked and shared in real time while providing a single version of the truth for all. There is no conflicting data, less confusion, and greater awareness of what is happening in the supply chain. This real-time backbone can support apps such as product authentication, serialization, and chain of custody that can monitor and help mitigate quality issues throughout the supply chain while providing a means to quickly identify and rectify problems when they arise.

Transparency requires a multipronged approach. Enterprises must make a mental shift and recognize the importance and benefits of supply chain transparency in building trust in the brand, driving efficiencies, enhancing collaboration, and reducing risk.

Enterprises must shift their technology, transitioning from enterprise-centric technology built on the point-to-point integration paradigm and instead connecting to a real-time platform that embraces its entire ecosystem of business partners, so data can be shared in real time with all parties. Newer approaches such as real-time networks provide both the data for better visibility and the tools to enhance transparency and accountability across the supply chain.

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